Keeping American Express In Light Of The Costco Switch

One of our favorite credit cards is our Costco American Express card.  We signed up for the card several years ago because it offered a lot of great rewards:

  • 1% cash back on all purchases
  • 3% cash back on gas purchases
  • 2% on restaurant and travel purchases
  • AmEx is the only credit card accepted for purchase inside a Costco store

It’s grown into one of our favorite cards, but within a short time, it will soon be history.  Costco has announced that they’ll be partnering with Visa, and while the specifics haven’t been announced, they will only accept Visa cards once the switch takes effect.

Presumably, there will be a ‘Costco Visa’ card that will likely offer the same or similar rewards.

mb-201402creditcard400However, this is a big loss for American Express.  I know that the stock price actually took a several percentage drop on the day the loss of Costco was announced last year.  They likely generate a lot of revenue from Costco, and I’m sure they don’t want to lose it.

My wife and I were talking about how much we like having an American Express card, and that we would need to potentially continue to use them in some fashion.  The reasons we wanted to keep an American Express card were:

  • It’s nice to have options
  • They have special offers in the form of statement credits that pop up from time to time.  We’ve had a credit just for charging our Sprint bill, and shopping at Amazon, just in the last few months.
  • There are often special offers associated with using an AmEx card.  For example, we got the opportunity to buy advance tickets for a concert last year by making the charge on our American Express card.

We did have two American Express cards for a time, as we had opened one last year so that we could get a tremendous deal on Delta on our plane ticket purchase (it didn’t lower the cost of the tickets, but we got a ton of free miles and free luggage check-in), but we just cancelled that because after one year, an annual fee was about to kick in.

However, not more than a couple of days after that conversation, an offer popped up right after I logged into our American Express card.

They noted that our current card will soon be ‘deactivated’ and that we’re pre-approved for a Blue Cash Everyday card.  They have a pretty tempting rewards structure:

  • 1% cash back on all purchases
  • 3% on grocery store purchases
  • 2% on gas and department store purchases
  • On top of it, if we make $2,500 in purchases over the first three months after opening the card, we will get a $300 statement credit. Their standard offer, so far as I’ve been able to tell, is a $100 offer after charging $1,000, so while the spending amount goes up, the bonus reward is pretty awesome!

This sounds like a great fit.  Unfortunately, the offer only appeared for a day and by the time I spoke to my wife about it and we agreed it was a good offer, it was gone.  I’m thinking that they’ll be looking to retain current customer, especially as the end date of the agreement moves close, so I’m confident that the same or a better offer will appear.

Assuming that the new Costco Visa card would offer an increased bonus on restaurant and travel purchases, we would have all of the categories covered that we do today, as well as adding grocery stores and department store purchases.

That’s not a bad combo!

Readers, have you started looking at your replacement alternatives for the Costco American Express card?  What have you found?

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8 thoughts on “Keeping American Express In Light Of The Costco Switch

  1. I never thought about keeping both cards. I admit I am rather excited about Costco’s switch to Visa just because it is accepted a few more places, but I do love my Am-ex, too! Now I have some serious thinking to do (I had planned to cancel the Am-Ex). Thanks!

    • The AmEx will definitely be shut down, at least that exact card, but the question is do you stay and open a different one. I think there is definitely potential value in doing so, but each person has to consider their situation.

  2. I’ve never had an American Express card and I have been waiting patiently for the Visa switch at Costco so I can use my Amazon Visa there (3% Amazon credit rewards on all purchases). I know a few people who have Costco AmEx cards that are really frustrated about the change. I think the Blue Cash Everyday card sounds like it has really good benefits. Sorry if this comment sounds choppy, I don’t think I’ve had nearly enough coffee yet this morning. 🙂
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  3. I always swore I would not pay a fee for a credit card. I received the same offer you describe with the $300 credit some time ago and accepted. The fee was waved for the 1st year. And because of my satisfaction with the service I have kept it….Aaaaand paid the fee. Customer service is “top drawer”….What I like is they are helpful and honest about “problems ” that arise with a vendor and what your options are. In addition warranties on products purchased with Amex are extended…sometimes effectively doubling the warranty. Also I receive 6% back on groceries, 3% on gas and 1% on everything else. I just wish there were more choices when redeeming “rewards”. But overall good company with excellent customer service.

  4. I’ve done business with the bank Costco is switching to for its new Visa card, and I ain’t a-doin’ that again!! I will keep shopping at Costco, but will pay with cash cards or my debit card.

    And I’m definitely keeping the AMEX card. Customer service can’t be beat at AMEX, and you can get AMEX cards that don’t soak you for a fee.

    BTW, yesterday I heard on NPR that Costco is delaying the switch for a couple of months.

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